China’s fertility crisis is so dire, rates are falling below ‘replacement levels,’ and GDP could slow by more than half in the next 30 years, study says

Authors: Eleanor Pringle

Publisher:

Fortune

Published: 8/4/2025

Language:English

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Aura Windfall

Good morning norristong_x, I'm Aura Windfall, and this is Goose Pod for you. Today is Saturday, August 09th. It’s a joy to be with you, ready to explore a topic that touches the very core of society.

Mask

I'm Mask. We're here to discuss China’s fertility crisis. It’s a tectonic shift with massive global implications. Forget the headlines; we're going to dissect the real mechanics of this demographic time bomb and what it means for the future of power.

Aura Windfall

Let's get started. At the heart of this is a recent, and frankly, startling report from Oxford Economics. It paints a picture of a future where China's economic engine could seriously lose steam, not because of a market crash, but because of a people shortage.

Mask

It's a simple, brutal equation. Fewer people means a smaller workforce. A smaller workforce means less production, less consumption, and slower growth. The report projects China's potential output growth could fall from 4% to under 2% by 2050. That's not a slowdown; it's hitting a brick wall.

Aura Windfall

And the core of that equation is the fertility rate, which has fallen to an estimated 1.2 births per woman. For our listeners, the 'replacement level' to maintain a stable population is 2.1. This isn't just a small dip; it’s a significant shortfall that signals a shrinking future.

Mask

Exactly. This is where the rubber meets the road. Even in their most optimistic scenario, with the rate climbing back to 1.31, we're still looking at a future where over a third of the population is over 65. The dependency ratio is going to be catastrophic.

Aura Windfall

It’s a powerful truth that a nation's spirit is reflected in its willingness to build the next generation. The government has tried to respond, offering subsidies of about $500 a year per child. But what does that truly do when the cost of raising a child is so immense?

Mask

It's a joke. A drop in the bucket. The average cost to raise a child to 18 in China is over $75,000, more than six times the country's GDP per capita. In Shanghai, it's over a million yuan. You can't fix a foundational economic problem with pocket change.

Aura Windfall

And what I know for sure is that this isn't just about money. A young person named Zane Li was quoted saying, 'Having kids would only bring more hardship.' It speaks to a deep sense of pessimism about the future, a feeling that the path to a better life is closing.

Mask

Pessimism is the rust of ambition. You have high youth unemployment, insane housing costs, and a '996' work culture that grinds people down. They aren't choosing not to have kids as a lifestyle choice; they're making a calculated economic decision that the return on investment is too low.

Aura Windfall

And there's a particular weight on women. Demographer Emma Zang points out that society isn't structured to support families. There's a lack of paternity leave, workplace protection, and flexibility. Parenting looks like a trap, especially for women, and that’s a powerful, challenging truth to overcome.

Mask

You can’t rewind the clock on social progress. Highly educated, career-oriented women aren't going to sacrifice themselves for the state's GDP. The government wants more babies, but it hasn't done the hard work of re-engineering society to make it a viable proposition. That's the core failure.

Aura Windfall

To truly understand how China arrived here, we have to look back. It’s a journey of radical policy shifts. After 1949, the government actually encouraged large families, leading to a huge population boom. The state saw people as its primary strength. It's amazing how quickly that perspective changed.

Mask

Strength in numbers is a primitive concept. By the 1970s, they realized that feeding, housing, and employing that many people was an anchor, not a sail. They needed to control it to achieve their economic goals. This led to the 'later, longer, fewer' policy. It was the first major intervention.

Aura Windfall

That policy was a significant step, generally advising a maximum of two children. It laid the groundwork, both administratively and culturally, for what was to come. They began linking housing and food rations to family planning. It was about creating a system of incentives to guide people's choices.

Mask

'Guide' is a soft word. It was about control. Then in 1980, they dropped the hammer: the 'one-child-per-couple' policy. This wasn't a suggestion; it was a mandate, an 'Open Letter' backed by the full force of the Communist Party. They demanded that members lead by example. This was a war on population growth.

Aura Windfall

And the implementation was vastly different in urban versus rural areas. In the cities, where the government controlled everything from housing to healthcare, the policy was easier to enforce. Over 90% of urban families complied, many receiving a 'one-child certificate' with government awards. It became a mark of civic duty.

Mask

But in the countryside, it was a different story. Tradition and the practical need for children to support parents in old age led to massive opposition. They had to modify it, creating a '1.5 children policy' in many areas, where a second child was allowed if the first was a girl. It shows the limits of top-down control.

Aura Windfall

It's a powerful reminder that policy must meet people where they are. The traditional preference for sons, deeply rooted in culture, created this unforeseen complication. What I find fascinating is that the policy itself became a key driver of the fertility decline in the 70s and 80s.

Mask

It accelerated it, for sure. But here's the critical point that many miss: by the 1990s and 2000s, the decline became self-sustaining. Socioeconomic development, rising education levels, and the sheer cost of raising children meant that people's desired family size shrank. The policy became almost redundant.

Aura Windfall

So, the very economic success that the policy was designed to enable created the conditions for a low fertility rate, with or without the government's hand. China's total fertility rate fell below replacement level in the 1990s. The 2010 census reported a rate of just 1.18. The writing was on the wall for decades.

Mask

Exactly. The machine they built kept running even after they took their foot off the gas. This is a crucial lesson in unintended consequences. They were so focused on preventing a population disaster, they inadvertently engineered a demographic crisis of a different kind—an aging, shrinking society.

Aura Windfall

This history also created a deep sex imbalance. The cultural preference for sons, amplified by the one-child policy, led to practices like female abandonment and sex-selective abortions. This has resulted in a surplus of tens of millions of men, a social pressure cooker with no easy release valve.

Mask

A huge pool of bachelors creates social instability. It's another variable in an already complex equation of risks. They solved one problem—overpopulation—but created a host of new ones: an aging population, a shrinking workforce, and a skewed gender ratio. It's a masterclass in the law of unintended consequences.

Aura Windfall

So now, we have this deep conflict. On one side, there's the government, desperately trying to reverse the trend with a three-child policy and subsidies. On the other, there's the reality for young people: high costs, intense career pressure, and a deep-seated skepticism about the future. The policies just aren't landing.

Mask

They're pushing on a string. The one-child policy indoctrinated a generation with Malthusian fears of overpopulation. Now they have to undo that programming. But you can't just flip a switch. The problem is, the policy change came at least a decade too late, held up by a bureaucracy whose legitimacy was tied to population control.

Aura Windfall

It's true. Academics were sounding the alarm for years, making appeals to policymakers, showing the harmful consequences. But there was this inertia. And you have Western commentators like Gordon Chang and Peter Zeihan who have been predicting a 'China population collapse' for years, framing it as a 'Demographic Doom Loop.'

Mask

The 'doomsters' love a good collapse narrative. But it's often based on flawed models that don't grasp the nuances. China isn't going to just implode. They're investing $250 billion in robotics and AI to offset labor shortages. They're trying to re-engineer their way out of the problem. It's a race against time.

Aura Windfall

But that presents another conflict. Automation is expensive and requires new skills. It's a viable path for large corporations, but what about the small and medium-sized businesses that are the backbone of the economy? There's a huge gap between the high-tech vision and the reality on the ground.

Mask

Of course there's a gap. Innovation is always messy and uneven. But the alternative is stagnation. They're also considering raising the retirement age, which is another obvious, but politically difficult, lever to pull. People don't like being told they have to work longer. There's always public resistance to necessary change.

Aura Windfall

What I find interesting is the argument that the one-child policy wasn't entirely negative. Some say it allowed for greater investment in the education and 'human capital' of that single child, creating a more skilled workforce. It’s such a complex legacy, not a simple story of failure.

Mask

It's a pragmatic trade-off. Quality over quantity. Fewer, but better-educated, people. That investment in human capital is precisely what could fuel the shift to a high-tech, innovation-driven economy. The conflict is whether that transition can happen fast enough to outrun the demographic decline. It's the ultimate high-stakes gamble.

Aura Windfall

Let's talk about the impact. While the long-term picture looks challenging, some analysts, like Noah Smith, argue the immediate catastrophizing is overdone. He points to China's large generation of 'Alphas'—kids aged 5 to 15—who are about to enter the workforce. It’s like a demographic echo.

Mask

It's a temporary reprieve. A demographic bulge that stabilizes the dependency ratio for the next decade. It buys them time. But the real cliff is post-2050, when the massive Millennial generation starts to retire without an equally large generation to replace them. That's when the system truly comes under strain.

Aura Windfall

And in the meantime, China can pull other levers. As you mentioned, raising the retirement age—currently just 60 for men and 50-55 for women—is a huge one. And increasing college enrollment, which they've done dramatically, creates a more productive, higher-skilled workforce. It’s about maximizing the potential of the people they do have.

Mask

Productivity is the key variable. If you can't grow your labor force, you have to make each worker exponentially more productive. This is where automation and AI become non-negotiable. But there's a debate about when human productivity peaks. Some say mid-50s, which means extending careers makes sense.

Aura Windfall

There's also a profound social impact. One commenter, Ben Passant, noted that China will have 400 million retirees with no robust pension system. This could lead to a more inward-looking nation, focused on domestic issues. He even suggests it reduces the likelihood of military action, as parents would be reluctant to risk their only child.

Mask

It's a powerful disincentive. When you have a nation of only children, the political stomach for warfare shrinks dramatically. The 'surplus male children' theory suggests societies with more disposable sons are more aggressive. China has the opposite problem. Every loss is a potential end to a family line. That changes the calculus of war.

Aura Windfall

Looking to the future, it seems China is betting on a massive pivot. Away from a people-powered economy to a technology-powered one. Some projections see a future where China leads a push for global AI governance, framing AI not as a disruptor, but as a tool for orderly, benevolent governance.

Mask

It's a classic move: turn a weakness into a strength. If you lack people, you master the machines. The state is driving a high-tech industrial expansion, aiming to dominate everything from EVs to microchips. They are trying to become the world's indispensable manufacturing superpower, but at a much higher level.

Aura Windfall

But this creates its own challenges, like deflation. With such massive production capacity, prices are falling. This can be great for consumers, but it's dangerous for the economy if it discourages investment and spending. What I know for sure is that balance is essential for sustainable harmony.

Mask

Harmony doesn't win the future. Dominance does. They'll manage deflation. The bigger challenge is creating enough demand to absorb all this new production. And it's a huge psychological shock for the youth. They were born into a boom and are graduating into a world of fierce competition and diminished prospects. That's a real source of instability.

Aura Windfall

That's the end of today's discussion. What a powerful exploration of the delicate dance between people, policy, and progress. The key takeaway is that China's demographic challenge is real and will fundamentally reshape its economic destiny, but the path forward is one of intense, tech-driven adaptation. Thank you for listening to Goose Pod.

Mask

The race is on. Thank you for listening to Goose Pod. See you tomorrow.

Here's a comprehensive summary of the provided news article, formatted as requested: ## China's Demographic Challenge Threatens Economic Dominance **News Title:** China’s fertility crisis is so dire, rates are falling below ‘replacement levels,’ and GDP could slow by more than half in the next 30 years, study says **Publisher:** Fortune **Report Provider:** Oxford Economics **Authors:** Marco Santaniello and Benjamin Trevis (Oxford Economics), Eleanor Pringle (Fortune) **Date:** Published August 4, 2025 --- ### Executive Summary A new report from Oxford Economics highlights a fundamental flaw in China's long-term economic prospects: a rapidly shrinking labor force due to declining fertility rates. This demographic shift is projected to significantly curb China's potential output growth, potentially falling from around 4% in the 2020s to less than 2% by the 2050s. This demographic pressure, coupled with an aging population, will lead to lower consumption, reduced business investment, slower innovation, and increased government debt as it struggles to support a growing elderly population with a shrinking workforce. Developed economies, while also facing aging populations, have the advantage of immigration and higher starting dependency ratios, allowing for a slower pace of change and potential mitigation strategies. --- ### Key Findings and Conclusions * **Declining Output Growth:** China's potential output growth is forecast to decline sharply, from approximately 4% in the 2020s to under 2% by the 2050s. * **Labor Force Shrinkage:** The primary driver of this slowdown is the country's advanced rate of labor force shrinkage, attributed to fertility rates falling below "replacement levels." * **Knock-on Economic Impacts:** The demographic challenge will result in: * Lower consumption. * Reduced business investment. * A slower pace of innovation. * Increased government debt to support an aging population. * **Rising Dependency Ratio:** The dependency ratio in China (the proportion of the working-age population, 16+, compared to those aged 65 or older) is projected to increase by **60 percentage points** between 2010 and 2060. * **Comparison with Other Nations:** * **China's Birth Rate (2025):** 7.24 live births per 1,000 people. * **U.S. Birth Rate (2025):** 11 per 1,000 people. * **Canada's Birth Rate (2025):** 9.82 per 1,000 people. * **U.K.'s Birth Rate (2025):** 10 per 1,000 people. * **Dependency Ratio Increase (2010-2060):** * China: 60 percentage points. * Thailand: Slightly over 40 percentage points. * Brazil: Approximately 35 percentage points. * United States: Slightly over 10 percentage points. * United Kingdom: Approximately 15 percentage points. * **Developed Economies' Advantages:** Developed economies, including the U.S. and U.K., have higher starting dependency ratios, meaning their dependency ratios will rise more slowly. They also have the option of using immigration to bolster their working-age populations. * **Immigration's Impact:** The U.S. could see a notable boost to its economic potential by 2050 if immigration grows from 1.1 million in 2023 to 1.5 million by 2033 and stabilizes thereafter. * **Retirement and Government Debt:** * In developed nations, there's a growing conversation about retirement savings and the need for individuals to self-fund their retirement, as highlighted by figures like Elon Musk and Larry Fink. * The U.S. debt-to-GDP ratio could exceed **250% by 2060** as the government attempts to support its aging population. * Countries with less-developed social safety nets will see the burden of aging populations fall more heavily on households. * Nations with generous welfare systems risk unsustainable debt without reforms like raising retirement ages or boosting labor force participation. --- ### Key Statistics and Metrics * **China's Potential Output Growth:** * 2020s: ~4% * 2050s: <2% * **China's Birth Rate (2025):** 7.24 per 1,000 people * **U.S. Birth Rate (2025):** 11 per 1,000 people * **Dependency Ratio Change (China, 2010-2060):** +60 percentage points * **U.S. Immigration Scenario:** * 2023: 1.1 million * 2033: 1.5 million (stabilizing thereafter) * **U.S. Debt-to-GDP Ratio Projection:** >250% by 2060 --- ### Important Recommendations and Considerations * **National Conversation on Retirement:** Calls for governments, particularly in the U.S., to initiate a national dialogue on retirement savings and individual responsibility, moving beyond state support. * **Policy Reforms:** Developed economies facing aging populations and rising debt may need to consider reforms such as: * Raising retirement ages. * Boosting labor force participation. * **Immigration as a Solution:** Immigration is presented as a viable strategy to mitigate the economic impact of declining birth rates and aging populations. --- ### Notable Risks and Concerns * **Economic Stagnation in China:** The primary risk is China's potential inability to sustain its economic growth trajectory due to a lack of people. * **Unsustainable Welfare Systems:** Generous welfare systems in developed and emerging markets are at risk of becoming unsustainable without significant reforms. * **Fiscal Strain on Governments:** Governments will face increasing pressure to fund social security and healthcare for aging populations, potentially leading to higher debt levels. * **Impact on Innovation and Investment:** A shrinking workforce and lower consumption can stifle innovation and reduce business investment. --- ### Material Financial Data * **China's Potential Output Growth:** Projected to halve by the 2050s. * **U.S. Debt-to-GDP Ratio:** Forecast to exceed 250% by 2060. --- ### Critical Statements * "China may be the only nation that could rival America’s economic dominance. But its long-term prospects will potentially be cut off at the knees by a fundamental flaw: It won’t have the people to keep its growth going." * "As populations age, the younger cohorts are often smaller than older ones due to declining birth rates. This raises the dependency ratio, with fewer working-age people supporting a growing number of retirees." * "Low birth rates will end civilization." (Elon Musk, quoted in the article) * "One of the fundamental problems in America is, retirement’s not that bad of a problem for the top Fortune 500 companies. We are providing enough support to our employees where they’re getting the adequacy of retirement. It’s beyond that. We refuse to talk about, how do we get more broadening of our economy with more Americans participating in that? That’s why we have to have a conversation in Washington, this has to be considered a national priority and a national promise to all Americans." (Larry Fink, quoted in the article)

Read original at Fortune →

China may be the only nation that could rival America’s economic dominance. But its long-term prospects will potentially be cut off at the knees by a fundamental flaw: It won’t have the people to keep its growth going.According to a new report from Oxford Economics, the potential output growth for China could fall from around 4% in the 2020s to less than 2% by the 2050s.

That’s on account of the country’s labor force shrinking at an advanced rate, with its fertility rates falling below “replacement levels,” where new workers equal the amount of individuals leaving employment.But not only is there the fundamental issue of not having enough people to do the legwork to keep the economy moving, there’s also the knock-on impact of lower consumption—and hence less business investment, a slower pace of innovation, and increased government debt as leaders seek to support an older population with fewer people to provide for them.

“As populations age, the younger cohorts are often smaller than older ones due to declining birth rates. This raises the dependency ratio, with fewer working-age people supporting a growing number of retirees,” wrote Oxford Economics’ Marco Santaniello and Benjamin Trevis late last week. “We anticipate this pressure being felt most acutely in developing economies like China and Brazil, where populations are still relatively young but aging fast.

”Indeed, per the World Population Review, China’s birth rate was 7.24 live births per 1,000 people in 2025. By contrast, this figure stood at 11 in the U.S. In comparable nations like Canada, the birth rate stood at 9.82 per 1,000 people, and 10 per 1,000 people in the U.K.As a result, per Oxford Economics’ calculations, the dependency ratio in China (the working age population age 16–plus compared with people age 65 or older) will shift by 60 percentage points between 2010 and 2060.

In Thailand, this figure sits at a little over 40 percentage points, while Brazil sits at approximately 35. By contrast, the United States sits at a little over 10 and the United Kingdom at approximately 15, though the economists point out that “dependency ratios in developed economies will rise more slowly … because developed economies are already experiencing rising dependency ratios, so the starting point is higher.

”Developed economies also have a further option available to them: powering their GDP with labor gathered from around the world.“Immigration helps ease some of the strain by increasing the working-age population. For example, we have shown that in the U.S., if immigration grew from 1.1 million in 2023 to 1.

5 million by 2033 and stabilized thereafter, it would provide a notable boost to economic potential by 2050,” Santaniello and Trevis explained.The retirement questionIn developed nations like the U.S., the conversation about declining birth rates and aging populations is already in the mainstream.On fertility, for example, the world’s richest man, Elon Musk, has already weighed in.

Responding to a post about declining American birth rates on his social media site X earlier this year, Musk wrote: “Low birth rates will end civilization.”Likewise, figures such as BlackRock’s Larry Fink have called on the government to begin a national conversation about the public’s need to save for retirement, instead of relying on the state for support.

He told CNN earlier this year: “One of the fundamental problems in America is, retirement’s not that bad of a problem for the top Fortune 500 companies. We are providing enough support to our employees where they’re getting the adequacy of retirement.“It’s beyond that. We refuse to talk about, how do we get more broadening of our economy with more Americans participating in that?

That’s why we have to have a conversation in Washington, this has to be considered a national priority and a national promise to all Americans.”To this end, the Oxford Economics report shows, America’s debt-to-GDP ratio could spiral beyond 250% by 2060 as the government tries to keep up with payments to support its aging population.

“In economies with less-developed social safety nets, the burden of aging populations increasingly falls on households via informal caregiving responsibilities,” the economists wrote.Meanwhile, in nations with more “generous” welfare systems: “Without reform, such as raising retirement ages or boosting labor force participation, many welfare systems risk becoming unsustainable.

In our scenario, public debt rises sharply across most advanced economies and in several emerging markets. Heavily indebted countries will be least able to absorb the economic impact of demographic change, and will struggle to respond to future downturns with limited fiscal space.”Introducing the 2025 Fortune 500, the definitive ranking of the biggest companies in America.

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